Choosing the right working/business model for your company is a decision that will shape the future the way you aspire it to be. It will have a direct effect on whether you are headed for success or not.

Of course the right working model for your start-up depends on the kind of product/service that you are offering. Here are some of the reasons why having a working model is essential.

Idea to product

The journey from an idea to a product begins with a model. It is only through a working model that the ambiguous idea turns into a concrete product. The working model hence helps reduce the time taken from the idea stage to production and the ultimate rollout.

To Forecast Future

A working model helps you in forecasting—that is to understand where you are headed, your goals and visions. This prediction cannot be done for a longer term, however a 12- 18 month period can be foreseen without much of a disruption. This also indicates to the investors that you are committed, and well past the idea stage.

What is special about your offerings? Your working model will help in portraying what is unique about your product/service. This is going to be the selling point when you offer it to your customers and this is what will determine its success.

Revenue Estimation

Your working model will give you a necessary understanding of your cash flow. It is your way of demonstrating— both to your prospective investors and to yourself —how you plan to capitalize on your profitability and earn income. This also helps one to identify potential investors.

One of the most important things you can do to ensure the financial health of your business is to create your revenue model. Estimating this is an ongoing process that will help you to manage your cash and continue to grow.

Your variables will be process specific and will depend on what stage you’re in. Basically you’re looking to find those variables that have the most impact on your revenue—and figure out what they are most sensitive to. A working model helps you to identify these inconsistencies and work towards a profitable future having understood the implications.

Swivel without dire consequences

The only thing that is constant about today’s market is change. Every entrepreneur has to deal with it and in case things do not work out, it is always more sensible to swivel after having completed a working model, rather than close shop after having begun a full-fledged start-up.

As an entrepreneur, it is essential to choose your model according to your belief in your idea and its execution, according to the potential of your product and the resources that you have to make it all happen.

Choose what is better for your start-up and don’t be afraid to change direction if you don’t feel that you are on the right path.

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